ADDRESS BY HE MR ADRIAN NASTASE, PRIME MINISTER OF ROMANIA at CBI's National Conference in Birmingham - 06 november 2001

As the first Romanian to address the CBI Annual Conference, I am honoured to share the floor with so many outstanding personalities of the political and business community .Let me thank you for inviting me today.

When you last met, you were looking at a different global economic situation than the one we face today.

The tragic events of 11 September in the United States have changed that. We are now faced with a global economic downturn. Markets which looked like a safe bet before September II look less attractive now. You, the business community, will be looking more carefully at strategic investment decisions.

I invite you to look at Romania.

I believe we have a good case.

Let me explain why.

First, Romania is a safe place to do business in because it is a country defined by Euro-Atlantic standards. We can be a secure host to Western investment, to your investment.

Romania should no longer be thought of as a 'former Communist country' .The Communist regime fell twelve years ago.

The past is gone. What defines Romania now is not that it used to be
a country on the wrong side of the Iron Curtain.

What defines Romania now is that it is a future member of NATO and the European Union.

We've made important headway. We're making huge strides and we'll make sure that we join both EU and NATO on time. We welcome the ratification of the Nice Treaty by the British Parliament. This is a significant step towards enlargement.

I was particularly pleased to read Minister Peter Hain's comments in the House of Commons that the EU candidate countries are already embryonic members of the European Union

Remember that a country like Romania is large by European standards. It is second only to Poland in terms of size and population. We will bring another 23 million consumers to the EU single market. That is an important gain. To quote Minister Peter Hain again, enlargement is not a favour that you are doing us, the candidates. It is a favour you are doing yourselves.

Secondly, Romania has some unique advantages for foreign investors.

Our geographical position, at the crossroads of national trade routes, facilitates access to over 200 million consumers, over a range of 1000 km. We can offer safe access to energy routes in the Caucasus and Central Asia.

Romania has immense natural resources, fertile land for agriculture, high tourism potential. We have a well-educated people, highly- skilled labour and talented IT specialists. Production in Romania could prove to be cost-effective and offer better value for your investment

Thirdly, and most important, Romania is a safe place to invest in because of the irreversibility of our economic reform programme and our commitment to stimulate investment.

We know we have been often criticised for the way we have managed our transition. Unquestionably, some of that criticism was justified. But there is no unique way of doing things -because every case is unique.

That is to be seen here in Birmingham, a City which, over the past three decades has seen as much, if not more 1ransitionl than any other in Europe. As heavy industry declined and high unemployment raged Birmingham, facing a barrage of problems, looked the future in the face and changed.

Birmingham is a place where those responsible for its future, understands the pain which accompanies turning an economy on its head.

Nobody told Birmingham how to do it. Nobody knew all the rules. Birmingham had to develop many of them to suit the circumstances as it went along.

Birmingham did not shake off its problems overnight and suddenly emerge as one of the most vibrant, modem cities on the continent. It had to work hard at it -and keep on working until it came right.

That is precisely what has been happening in Romania!

We may have made mistakes and delayed too long. But those amongst you who have taken the tough decisions necessary to restructure large businesses, will understand the pain to many thousands of people. In Romania, those same decisions affected the lives of every single working person in the country .

We have been working at it, and now it's coming right.

My Government took office in December 2000.

We've made it our goal to ensure a flexible, pro-active and result-oriented economic governance.

We have a clear four-year strategy for further rapid economic reform, which will transform us into a fully functional market economy.

One of our central objectives is to create a vibrant, competitive and knowledge-based economy, capable of supporting the aspirations of the Romanian people to join the European Union and NATO, an economy which can adapt rapidly to the extraordinary global challenges that confront us all.

In November 2001, the economic results speak for themselves:

Our growth rate is the fastest in the whole of Central Europe -nearly 5% so far this year, our highest GDP growth in 5 years. Productivity has increased by 10% this year.
Exports are up by 15%, with the private sector accounting for two
thirds of our GDP.

We have kept the budget deficit within manageable limits whilst reining-in inflation to the parameters agreed with international financial institutions. After complex negotiations, a new stand-by agreement was completed and endorsed by the IMF's Board on Wednesday last.

Romania is not stuck in the past. It has made progress. It is going in the right direction.

As we gather pace the international business community and international financial institutions will have serious expectations concerning the co-ordination and sustainability of our policies.

Let me assure you that we are determined to fulfil all our commitments.

As a government, our responsibility towards business is to improve fair competition and transparency , and reduce bureaucracy.

I don't have to tell you that that investors want to work in a predictable environment with a clear, stable regulatory framework. Whilst it is true that Romania has often changed its economic legislation in the past few years, remember that we have been mapping out an entirely new legislative framework which will harmonise with Western norms .

As part of getting the climate for investment right, this year we introduced the Law on the Promotion of Direct Investment.

The law provides for equitable treatment, as well as the unimpeded freedom to repatriate profits annually, transfer abroad profits yielded by shares, dividends, bonds or any other income sources related to the investment.

It offers important facilities for investments over 10 million USD, and incentives for investing in free trade areas. There are no custom duties or value-added taxes on imported capital goods.

There is tax exemption for up to 4 years for investments in information technology and communications, agriculture, the food industry, trade and utilities.

We are particularly proud of our IT sector which is developing into a star performer. This is why we introduced income tax exemption for IT professionals together with software park legislation and other measures designed to support the growth of this sector .

But, no matter how favourable our investment laws, we are well aware that they mean nothing if business is mired in bureaucracy.

Let me send this message loud and clear to every potential investor in Romania.

My government will not allow red tape to choke-off our potential as a nation, or create opportunities for corruption.

The twin fights against corruption and bureaucracy are key priorities. Administrative procedures for those wanting to do business in our country are being simplified. We aim for a leaner, more efficient public administration which, with British and European Commission support, we are already beginning to achieve.

With this in mind, and directly subordinated to me, we have created a special department for relations with foreign investors, to ensure that major foreign investors have the assistance they need, and easier access to decision-makers.

We are strengthening law enforcement and have adopted our Anti-Corruption Programme, based on analysis by the World Bank.

We are serious about cutting out the cancer of corruption from the body of our country. In our first four months of government, 195 people, including senior public service officials, have been charged with corruption.

Romania is not stuck in the past. Romania has made progress. Romania is going in the right direction.

That is why I have no hesitation in adding this -if you are a potential major investor in Romania and you believe that red tape or corruption is hampering your progress -call me! With the measures we are taking, I don't believe it will be necessary but, if my 'phone does ring, be sure that something will happen.

Ladies and Gentlemen

This year we have concluded some major privatisation deals: Banca Agricola, a major Romanian commercial bank has been sold to the Austrian group Raiffeisen.

SIDEX, the largest steel factory in Eastern Europe, has been sold to the British-Indian consortium ISPAT, the world's 4th steel producer, in a deal worth half a billion USD.

Prime Minister Blair called this a major step forward in restructuring the Romanian economy I and expects it to stimulate additional direct foreign investment.

Next year, the focus will be on privatising the largest Romanian bank, the Romanian Commercial Bank, as well as two regional energy distribution companies, as well as the large aluminium smelter ALRO.

Also high on our agenda are the sale 0£ the remaining stock in the national phone operator, ROMTELECOM, the offer for sale of the vast majority of enterprises under the PSAL I program with the World Bank.

In the energy field, foreign investors will be invited to establish joint ventures with thermal and hydroelectric power producers. We are particularly interested to see British compaI1ies, with their innovative management methods, coming in to the energy field, especially as we privatise PETROM, our national oil and gas company.

These examples - and there are many I many others - are hard proof of our commitment to speeding up economic reforms to provide investors with profitable opportunities which will keep them in our country for many years to come.